Business, 13.04.2021 05:00 fdougie111
Suppose stock returns can be explained by a two-factor model. The firm-specific risks for all stocks are independent. The following table shows the information for two diversified portfolios:
β1 β2 E(R)
Portfolio A .83 1.13 17%
Portfolio B 1.43 −.23 15
If the risk-free rate is 4 percent, what are the risk premiums for each factor in this model? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e. g., 32.16.)
Looking for:
Factor F1 = _%
Factor F2 = _%
Answers: 1
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Suppose stock returns can be explained by a two-factor model. The firm-specific risks for all stocks...
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